Managing Innovation in an Uncertain World: Course Overview Note

Abstract

The Harvard Business School Managing Innovation in an Uncertain World course helps students understand the challenges that uncertainty implies for innovation and how to overcome them. The course emphasizes multiple levels of analysis--from creating and executing development project, to building and balancing portfolios of project, to assessing and selecting future opportunities for development--showing how to align these activities to meet uncertainty and take advantage of the opportunities it presents. Allows students to respond to all the situations they encounter from multiple perspectives, assume different roles--from project manager to CEO--to appreciate how the various organizational roles themselves reflect these perspectives.

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Set in the year 2004, when Rwanda commemorated the 10th anniversary of a genocide that had claimed the lives of over 10% of its population. Focuses on the formulation of an economic strategy to rebuild the economy and its institutions after the devastation. Rwanda, one of the poorest countries in the world, highlights the challenges of economic development in Africa and in other low-income countries. Provides a brief political and economic history of Rwanda, but focuses on the country preceding and after the genocide. A description of government policies since 1994 enables discussion of the efforts of the transitional government under Bizimungu (1994-2000) and the first Kagame government (2000-2004) to restore and build the economy. Provides detailed economic and social data as of 2004, allowing evaluation of policy results. Concludes as President Kagame, now formally elected as head of state, considers an economic strategy to meet Rwanda's current challenges and increase the country's prosperity over the next decade.

Four teams across the world are furiously designing, building, testing, and learning to sail a boat that would be one-of-a-kind in order to win the 2013 America's Cup. Choosing the best development path was a challenge as the teams had less than three years to prepare, and each decision would affect the performance of the boat as well as the duration of the sailors' training. The case traces the dilemma faced by the favorite, Oracle Team USA (OTUSA), as rumors grew that the challenger was pursuing a revolutionary technology that would enable its six-ton boat to literally fly above waves. With only a year left before the Cup, should OTUSA keep refining its current technology, called "skimming," or should it pivot towards "foiling" (flying)? At this stage foiling could be a red herring, and even if it was not, the limits of the performance of a foiling boat would remain a mystery for some time. The case explores the dilemma of managing innovation in an uncertain environment, where the decision would be sanctioned a year later by a win or a loss.

Formal contracts represent an important governance instrument with which firms exercise control of and compensate partners in R&D projects. The specific type of contract used, however, can vary significantly across projects. In some, firms govern partnering relationships through fixed-price contracts, whereas in others, firms use more flexible time and materials or performance-based contracts. How do these choices affect the costs and benefits that arise from greater levels of partner integration? Furthermore, how are these relationships affected when the choice of contract is misaligned with the scope and objectives of the partnering relationship? Our study addresses these questions using data from 172 R&D projects that involve partners. We find that i) greater partner integration is associated with higher project costs for all contract types; ii) greater partner integration is associated with higher product quality only in projects that adopt more flexible time and materials or performance-based contracts; and iii) in projects where the choice of contract is misaligned with the scope and objectives of the partnering relationship, greater partner integration is associated with higher costs, but not with higher product quality. Our results shed light on the subtle interplay between formal and relational contracting. They have important implications for practice, with respect to designing optimal governance structures in partnered R&D projects.